Are Dubai real estate prices likely to remain competitive in 2024?

22/01/2024 by Ali Sajwani

Last year represented another exceptional period for the UAE’s real estate market, with both residential and commercial segments performing well throughout 2023.

Highlights included unprecedented levels of transactions and the sale of the UAE’s most expensive penthouse for a record-breaking $136.2 million. And while Dubai represented a particular hotspot – its property sector peaking in April with an astonishing $1.46 billion worth of business in a single day – it was encouraging to see healthy levels of activity across all seven Emirates.

Of course, high demand – though good news for our market – puts pressure on property prices. Dubai’s average residential prices increased by 19.1% in the 12 months leading up to October 2023. So, the question on many people’s lips is this: can the Emirate’s booming real estate market remain competitive in 2024?

Here are my thoughts…

Strong demand

In the first three quarters of 2023, Dubai’s real estate transactions witnessed significant increases in both value (36.7%) and volume (33.8%) compared to the corresponding period of the previous year.

According to data from the Dubai Land Department (DLD), real estate investments in our Emirate also grew. More than 80,000 investors registered over 109,000 investments worth almost $76 billion during this period – a value increase of more than 50%, year on year.

Rents have also been rising in Dubai, registering a 32.6% year-on-year uptick in Q2 2023, according to analysts at ValueStrat. While increases are expected to slow somewhat during the coming 12 months, few experts are predicting a decline in rental prices in 2024.

So, whether you’re looking to purchase or rent property in Dubai, expect to witness stiff competition throughout the course of this year.

Value for money

Despite strong demand for Dubai real estate and rising prices, our Emirate has continued to offer incredible value for money in comparison to many other international property hubs.

Monaco, for instance, was the most expensive city on Knight Frank’s 2023 list of prime residential property markets, with $1 million buying you just 17 sqm of space. In comparison, the same investment will buy approximately 105 sqm of real estate in Dubai, meaning buyers can secure more than six times more space for their money.

Of course, the fact that Dubai’s real estate sector represents such good value for money hasn’t escaped the attention of international investors. On the contrary, buyers looking to capitalise on the high-quality, competitively priced property available in our Emirate account for a significant proportion of the demand we saw last year.

Put simply, I wouldn’t be surprised if the gap between Dubai and locations such as Monaco, Hong Kong and New York were to narrow in 2024. The question is by how much?

Wealth migration

Given the ever-rising popularity of Dubai’s real estate market, it has been no surprise to see more and more high-net-worth individuals (HNWIs) relocate to the Emirate in recent years.

With an enviable reputation for quality of life, luxury and economic prosperity, Dubai has firmly established itself as a global wealth hub. Our Emirate is already thought to be home to more than 68,000 millionaires. An estimated 4,500 new millionaires moved to the UAE last year, making our nation the second most popular country for relocation among HNWIs after Australia.

This trend of wealth migration to Dubai looks set to continue throughout the course of this year, meaning demand for real estate – especially in the premium segment – will continue to rise.

In summary, Dubai real estate continues to represent superb value for money on the international stage, but amid high demand and limited supply, it is difficult to predict exactly how long this situation will persist. Our Emirate’s property sector has gone from strength to strength since the global pandemic, and there are no signs that this trend will abate anytime soon.

UAE GDP is on course to double in 2024 to 4.8%, according to analysts from Oxford Economics. Statista, meanwhile, expects our nation’s real estate market to register a compound annual growth rate (CAGR) of 3% during the period 2023-28, reaching a market volume of $800 billion within the next five years.

So, while Dubai’s property sector looks likely to retain its competitiveness throughout 2024, all signs point to demand increasing during the course of this year. The chances are that investors who look to purchase property 12 months from now will not be able to achieve the same value for money as they can today.

With this in mind, those thinking of acquiring real estate in Dubai may be wise to consider investing sooner rather than later.

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